Creative Insurance Solutions for
Today's Mature Family
Survivorship life insurance offers a creative and flexible solution for a family's life insurance needs. Often referred to as last-to-die or second-to-die, this life insurance policy insures two individuals yet provides only one death benefit payable upon the death of the second insured. In many instances,
survivorship life insurance may be less expensive than a single life insurance policy on one of the insureds. This is one is medically “uninsurable,” thus providing added security and planning potential for otherwise difficult situations.
Why Survivorship Life?
Survivorship life insurance presents several opportunities, the most common of which is the funding of estate taxes. Even with the appropriate wills, trusts, and property ownership, assets of married couples that exceed $7 million (for 2009) may be subject to Federal estate taxes (for single individuals,assets over $3.5 million in 2009 are subject to estate taxes). For married couples, a survivorship life insurance policy can be an integral part of an estate plan. For instance, suppose Peter and Kim are both 60 years of age and have three adult children. Their net assets total $7.5 million. They have updated and signed the appropriate legal documents (wills, trusts, etc.), and repositioned their asset ownership in order to maximize their respective applicable exclusion amount.* The potential exists for only $7 million to pass to their heirs estate tax free. However, the remainder of their assets would be subject to Federal estate taxes if they were to die in 2009 (excluding other administrative and funeral costs).
One solution to this problem would be to create irrevocable trust to purchase a survivorship life
insurance policy. In this situation, the trust would be the owner and beneficiary of the policy, which would allow the policy proceeds to pass to the trust beneficiaries (Peter and Kim’s children) estate tax free. In addition, if the trust is structured properly, Peter and Kim can make a gift of the policy premiums to the trust by using their annual gift tax exclusions (without incurring a gift tax, individuals can gift up to $13,000 per year per donee to anyone they wish in 2009, while married couples can gift up to $26,000 per year). Even if a couple does not foresee any estate tax problems, survivorship
life insurance can still be a dynamic method to enhance any gifting or wealth transferring program. For instance, a survivorship life insurance policy can help provide wealth to children and grandchildren or potentially transform regular gifts to charity into a sizeable long-term gift.
The many uses of survivorship life insurance can result in a “win-win” situation for the insureds and their family. Whether you have an estate tax problem or wish to leverage the value of any gifts you make to your children, grandchildren, or favorite charity, a survivorship life insurance policy can help
provide maximum benefit for reasonable cost. A consultation with a qualified professional can help you determine how a survivorship life insurance policy can best fit into your overall financial plan. $
* Under current tax law, estate taxes will be repealed in 2010 and reinstated in 2011 at pre-2002 levels, unless Congress takes further legislative action.
Strategies to Sell Your Home
When you sell a home on your own, there is more required than just putting up a curbside sign for buyers to come to your door with money in hand. However, doing a little “homework” can help you understand what is involved when you decide to sell your home. Sellers, who are emotionally
attached to their homes, often price them too high. To determine a realistic price, compare your home with similar homes in your neighborhood or town. If houses are not selling quickly or if the price of your home is higher than those around you, you may have to set the price lower than you originally
intended. You may choose to hire an appraiser to help you determine an appropriate selling price.
All too often, owners skimp on advertising. In addition to the “For Sale” sign in your front yard, post others where legally allowed. Compile a brochure or fact sheet listing the asking price, lot size, individual rooms, and dimensions, heating and cooling systems (with monthly utility bills for the last year), appliances or other fixtures included, present financing, taxes, and any unusual or particularly attractive features. Don’t forget to include a telephone number and show your property by appointment only.
The Internet can also be a useful tool when selling your home. People who may be relocating to your area can view photos and a fact sheet, which could spark their interest. It may be wise to screen potential buyers. If they seem interested, inquire about their potential down payment. If you are getting close to a deal, consider asking the buyer to supply a financial statement from a bank or mortgage lender. A serious buyer will be happy to provide the requested information. You may even ask buyers if they have obtained a “pre-approval” or “pre- qualification” letter from a bank or mortgage company, to ensure that the funds they are offering for your house would be available for them to borrow. If you need assistance, a “hybrid” real estate company may prove a lower-priced alternative to traditional full commission brokers. These companies generally charge a flat fee—based on the asking price of the house—to screen prospective buyers, arrange appointments, suggest a price, and negotiate
with buyers. However, showing the house would be the owner’s job. If you decide to sell
your home on your own, remember the following:
1. Price It Fairly. Compare your house to others in your neighborhood that have recently been sold,
and factor in any improvements or unusual assets.
2. Advertise. Use more than just a “For Sale” sign on your lawn. Circulate brochures, run ads in the
local newspapers, and post notices on bulletin boards and real estate websites.
3. Screen Buyers. Before accepting an offer, ask the buyer to provide a financial statement or obtain mortgage pre-approval or pre-qualification. When should you decide to discontinue selling the home on your own?
Assuming a house is properly priced and in a reasonably active market, a homeowner attempting to sell without professional assistance should allow for a predetermined time period without a written offer. If you find you want or need to move more quickly, consider using a hybrid real estate company or a professional broker. Selling a home on your own can be a great deal of work, but you may save thousands of dollars that would otherwise be “lost” to real estate commissions. On the other hand, while the prospect of improving your financial position may be tantalizing, the task may be too time consuming or beyond your expertise. Professional real estate assistance, whether
from a service or a broker/ agent, may “save” you more than you realize as you prepare to sell your home. The decision of whether you should sell your house by yourself or with professional assistance is complicated. However, doing a little research can help you decide the best strategy for you and your situation.
Protecting Your Financial Information in Cyperspace
Consumers are conducting financial transactions in cyberspace more and more frequently. Consequently, they may become vulnerable to tracking, hacking, identity theft, phishing scams, and other online risks. While nothing can guarantee complete safety in cyberspace, much can be done to understand and minimize your exposure to risk. Here are some basic ways to help maintain privacy on the web:
Before conducting any financial transactions online, carefully read the privacy policies of each institution with which you plan to do business. Find out how the business intends to maintain and secure your financial information. If you don’t understand the legal jargon, ask questions. You can always email or call a business and request a simplified explanation of its privacy policies. Avoid using easily decipherable PINS and passwords. When deciding on PINS, passwords, and other log-in information, avoid using your mother’s maiden name, your birth date, the last four digits of your Social Security number, or your phone number. Avoid other obvious choices, like a series of consecutive numbers or your home town. Also, avoid using the same PINS and passwords on multiple sites. Then, if your PIN or password is discovered on one site, the others will remain secure. Use secured web pages. Use only secure browsers when shopping online to guard the security of your transactions during transmission. There are two general indicators of a secured web page. First, check that the web page url begins with “https.” Most urls begin with “http;” the “s” at the end indicates that the site password will be encrypted before being sent to a third-party server. Second, look for a “lock” icon in the window of the browser. (It will not be in the web page display area.) You can double-click on this icon for details of the site’s security.
Be cautious about providing your financial information to websites that are not well known. Larger companies and well-known websites have developed policies to protect the rights and financial information of their customers. So, resist the temptation of providing personal information to companies that are unfamiliar to you. Keep your operating system up-to-date. High priority updates are critical to the security and reliability of your computer. They also offer the latest protection against malicious online activities. When your computer prompts you to conduct an update, do it as soon as possible. Use updated antivirus software and spyware. Viruses and spyware are two kinds of potentially malicious software from which you need to protect your computer. Keep both your antivirus and your spyware programs updated.
Keep Your Firewall Turned On. A firewall helps protect your computer from hackers who might try to delete information, crash your computer, or steal your passwords or credit card numbers. Make sure your firewall is always turned on. Do Your Homework. To learn more about securing your computer and protecting your personal information, visit www.getnetwise.org, www.onguardonline.gov,
These websites provide valuable information to help you protect your
private information when conducting financial transactions online. In addition, the Federal
Trade Commission (FTC) works for the consumer to prevent fraudulent, deceptive, and unfair practices in the marketplace. To file a complaint or to obtain more information, visit www.ftc.gov or call 1-877-FTC-HELP (1-877-382-4357). While maintaining ano- nymity on the web can be challenging, it’s important to protect your financial information and the financial information of your family. In time, more protective measures will be established so you can feel assured that your financial information
will be protected from unknown third parties. In the meantime, it is up to you to safeguard your financial information through education and awareness.
Transferring Credit Card Balances
If you have run up a large bill on a credit card that charges a high annual percentage rate, it may make sense to transfer the balance to another card that offers a lower rate. But before you agree to move
existing debt to a card that promises a very low APR on balance transfers, read the fine print. Even if you are offered a great initial rate on a transfer, it may only last for a short time. If you have a debt you are unlikely to pay off within the introductory period, you may be better off opting for a card that offers a slightly higher rate that does not expire. Watch out, too, for annual, late, and over-the-limit fees, as well as high rates on new purchases.